A record number of people quit their jobs last year in what’s been dubbed as the “Great Resignation,” but the advisory industry has so far been spared from the talent exit.
Around 47 million Americans quit their jobs in 2021, according to data from the Bureau of Labor Statistics.
Portable Books of Business
Advisors essentially see themselves as entrepreneurs, according to Danny Sarch, president at recruiting firm Leitner Sarch Consultants.
“Advisors have books of business,” Sarch said. “They think of themselves as practitioners with their own practice within the larger organizations.”
Advisors “are almost always in the driver’s seat” when it comes to making a work change, according to Louis Diamond, president at recruiting firm Diamond Consultants.
“If the advisor feels like they’re underpaid, underappreciated, don’t have the flexibility they need or if they’re just looking for something different, most advisors have portable books of business, which is their golden ticket,” Diamond said.
Although advisors have portability, switching firms is more difficult for advisors compared to those in other industries, according to Marina Shtyrkov, associate director for wealth management at Cerulli Associates.
“Repapering, the threat of litigation, the disruption to clients, the fear of losing clients during the transition, all of it makes advisors think twice before they consider switching firms. The risks are higher for an advisor than in other roles, where you’re simply leaving one job for another,” Shtyrkov said, noting that advisors stay at a firm an average of 11 years.
But some advisors considering retirement may decide to do so now because of the current market volatility, according to Mark Elzweig, president at recruiting firm Mark Elzweig Company.
“Tumultuous” markets are “stressful” for both clients and advisors, Elzweig said. “That will prompt some advisors to retire a little earlier than they had planned.”
Elzweig says there are lucrative succession deals currently on offer at wirehouses or regional broker-dealers. And for independent advisors, there could be 50 to 70 potential buyers for the practice, depending on the location, he adds.
Alternative Work Arrangements
Advisors have been on the move independent of the Great Resignation. Cerulli estimates that 9.2% of advisors changed firms in 2021, compared to 9.0% in 2020 and 8.5% in 2019, according to Cerulli’s Shtyrkov.
Advisors have been moving more frequently in recent years because they have more options, according to Diamond. These include going independent or joining a new entrant in the industry, he says.
“An expanded landscape means advisors have more choices and that’s led to more movement,” Diamond said.
The pandemic has also helped influence advisors to make a change, according to Diamond.
“Some of it’s just having time at home to do due diligence and reflect; that was part one of the pandemic,” Diamond said. “Now in part two it’s business as usual and advisors realize that there are really good options out there and many are looking for more freedom and control and that may or may not be accomplished at their current firm.”
There has been “mounting advisor interest in independence,” and work from home arrangements “may be that extra nudge that certain advisors needed to make the move,” according to Shtyrkov.
“I don’t think the pandemic has stirred a massive wave of transitions, but I do see signs that it has accelerated decisions and further encouraged those who were already likely or somewhat likely to transition,” she said.
Pain Point for Certain Roles
Meanwhile, finding and retaining support staff is “a huge pain point” for many of Diamond's clients. These include client service associate and advisor support staff roles, he says.
“Those roles are more like a traditional employee at any other firm across the economy. There’s a different job description and job dynamic than a producing advisor who has a portable book of clients with them,” he said.
But while staff positions have been impacted, “it’s not like people are complaining to me that people are leaving left and right,” according to Sarch.
Morgan Stanley has had relatively few staff departures during the pandemic and received around a half million job applications in 2021, chief executive officer James Gorman said last week.
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